Corporate America CU Seeks Audits

Records from BDO Seidman, the auditor of U.S. Central Federal Credit Union, have been subpoenaed by Corporate America Credit Union in its suit against the directors and officers of the corporate.

Corporate America is seeking all spreadsheets, correspondence, drafts and investment valuations and research from U.S. Central in 2008, court documents showed. Besides BDO Seidman, a subpoena has also been issued for records from Callahan & Associates, Riskspan, Pacific Investment Management Co., Andrew Davidson and Co. and Clayton Financial Services.

On Oct. 20, 2009, Corporate America filed a suit in federal court in Alabama that alleged U.S. Central forced it to buy what it considered to be worthless securities right before U.S. Central had to write down its mortgage-backed securities by $1.2 billion. Corporate America is seeking $9 million in damages. In March 2009, the NCUA placed U.S. Central and Western Corporate Federal Credit Union in conservatorship.

When asked about the reason for the subpoenaed records, Ben Hayley, who was hired as general counsel at Corporate America in September, told Credit Union Times, he could not comment because he is not litigation counsel.

"I am presuming it is correct," Hayley said of the records subpoena. "I have not seen the subpoena come across my desk."

Hayley said all legal questions involving the suit should be referred to Tammy McClendon Stokes, an attorney with Donaldson & Guin LLC in Birmingham, Ala. Stokes did not return calls by press time.

Corporate America and 26 other corporate credit unions that were members of U.S. Central alleged they were misled when U.S. Central converted $450 million of temporary capital to permanent capital right before capital was scrubbed during the fall of 2008.